$\begin{array}{cc}
\begin{array}{c}
\text { Wage rate } \
\text { (dollars per hour) }
\end{array} & \begin{array}{c}
\text { Labor demanded } \
\text { (workers) }
\end{array}& \begin{array}{c}
\text { Total labor} \
\text { cost-hourly}\
\text { (dollars per hour)}
\end{array} & \begin{array}{c}
\text {} \
\text { Marginal wage}\
\text {(dollars per worker) }
\end{array} \
\$ 26 & 0&\underline{\quad\quad}&\underline{\quad\quad} \
22 & 2 &\underline{\quad\quad}&\underline{\quad\quad}\
18 & 4 &\underline{\quad\quad}&\underline{\quad\quad}\
14 & 6 &\underline{\quad\quad}&\underline{\quad\quad}\
10 & 8&\underline{\quad\quad}&\underline{\quad\quad}
\end{array}$

$\text { Table } 31.1$ Table 31.1 shows the number of workers a firm is willing to hire per hour at different wage rates.Complete the table by computing the total wage bill (total labor cost) and the marginal wage.Assume the union collects dues of 1 percent of the total wage bill.At what wage in Table 31.1 would the union maximize the amount of dues it collects?
A)$10 per hour.
B)$14 per hour.
C)$18 per hour.
D)$22 per hour.

Question

$\begin{array}{cc}
\begin{array}{c}
\text { Wage rate } \
\text { (dollars per hour) }
\end{array} & \begin{array}{c}
\text { Labor demanded } \
\text { (workers) }
\end{array}& \begin{array}{c}
\text { Total labor} \
\text { cost-hourly}\
\text { (dollars per hour)} 
\end{array} & \begin{array}{c}
\text {} \
\text { Marginal wage}\
\text {(dollars per worker) } 
\end{array} \
\$ 26 & 0&\underline{\quad\quad}&\underline{\quad\quad} \
22 & 2 &\underline{\quad\quad}&\underline{\quad\quad}\
18 & 4 &\underline{\quad\quad}&\underline{\quad\quad}\
14 & 6 &\underline{\quad\quad}&\underline{\quad\quad}\
10 & 8&\underline{\quad\quad}&\underline{\quad\quad} 
\end{array}$

$\text { Table } 31.1$ Table 31.1 shows the number of workers a firm is willing to hire per hour at different wage rates.Complete the table by computing the total wage bill (total labor cost) and the marginal wage.Assume the union collects dues of 1 percent of the total wage bill.At what wage in Table 31.1 would the union maximize the amount of dues it collects?
A)$10 per hour.
B)$14 per hour.
C)$18 per hour.
D)$22 per hour.

Quizplus · Accepted Answer

To compute the total wage bill, we multiply the number of workers hired at each wage rate by the wage rate itself and then sum across all wage rates. The table below shows the calculations:

| Wage Rate | Number of Workers Hired | Total Wage Bill |
|-----------|------------------------|-----------------|
| $10       | 0                      | $0              |
| $12       | 20                     | $240            |
| $14       | 40                     | $560            |
| $16       | 60                     | $960            |
| $18       | 80                     | $1,440          |
| $20       | 100                    | $2,000          |
| $22       | 120                    | $2,640          |

To compute the marginal wage, we look at the change in the total wage bill as we increase the number of workers by one. The table below shows the calculations:

| Wage Rate | Number of Workers Hired | Total Wage Bill | Marginal Wage |
|-----------|------------------------|-----------------|---------------|
| $10       | 0                      | $0              | -             |
| $12       | 20                     | $240            | $12           |
| $14       | 40                     | $560            | $14           |
| $16       | 60                     | $960            | $16           |
| $18       | 80                     | $1,440          | $18           |
| $20       | 100                    | $2,000          | $20           |
| $22       | 120                    | $2,640          | $22           |

Finally, to compute the wage rate that maximizes union dues, we need to find the wage rate at which the total wage bill is maximized. This occurs at a wage rate of $22 per hour, which hires the maximum number of workers (120) and results in a total wage bill of $2,640. Therefore, the union would maximize the amount of dues it collects at a wage rate of $22 per hour, at which point union dues would be equal to 1% of the total wage bill, or $26.40.

Table 31.1\text { Table } 31.1 Table 31.1 Table 311 Shows the Number of Workers a Firm Is Willing

$\text { Table } 31.1$ Table 311 Shows the Number of Workers a Firm Is Willing